Are Realtor Fees Negotiable? (How Sellers Can Save Money)

Home Selling

Are Realtor Fees Negotiable? (How Sellers Can Save Money)

August 15, 2019 | by Jamie Ayers

At A Glance

Many home sellers don’t realize that realtor fees aren’t set in stone. However, successfully negotiating a lower commission rate requires a strong strategy. Here are some tips to help make your negotiations go smoothly.

Are Realtor Fees Negotiable? (How Sellers Can Save Money)

Typically, commission fees total 6% of a home’s closing price, and that means thousands of dollars are taken out of your profit. Understandably, sellers are always looking to find ways to save on these pesky fees.

Luckily, commissions are always negotiable — by law. However, just because fees can be negotiated, doesn’t mean it’s easy to convince a professional to lower their commission rate.

An easier option is working with a company that has pre-negotiated lower realtor fees. Clever has partnered with top agent in your area who will list your home for a flat fee of $3,000 or 1% on homes over $350,000.

> Connect with Clever to learn more about how you can work with a local agent and save up to 50% in commission.

Or, if you want to negotiate a lower commission on your own, you’ll need to have some tricks up your sleeve. This guide will explain how commission fees work and provide some tips on how you can negotiate a lower rate with your realtor.

Are realtor fees negotiable?

Realtor fees are always negotiable. However, your leverage will vary when negotiating based on the local market conditions, your negotiation skills, and the realtor you’re working with.

For example: if you’re a skilled negotiator and your city is in a seller’s market, you can likely convince your realtor to charge a lower fee since they’ll need to do less work to sell your home.

However, you won’t see as much success if you’re new to negotiating and your city is in a buyer’s market.

What are normal realtor fees?

Typical realtor fees total 6%. This figure is comprised of both the buyer’s and seller’s agent’s fees; each receiving 3%. It’s possible to find realtors that charge less, such as flat-fee realtors, but those are not the norm.

Who pays realtor fees?

Sellers are generally expected to pay both the buyer’s agent’s and seller’s agent’s fees. However, like everything in real estate, this is negotiable. A keen negotiator in a seller’s market may be able to convince a buyer to pay a portion of these fees.

How are realtor fees split?

Realtor fees are split evenly between buyer and seller agent — each gets 3%. This comes to 6% total.

How to Negotiate Realtor Fees

Providing logical arguments is generally the only way to negotiate a lower rate. Here are situations you may encounter and how you can use them to your advantage:

Sell During the Off-Season

By definition, realtors have less work during the off-season. Because of this, they may be willing to accept a lower commission fee just to keep the cash flowing. This argument will work best with an agent who has very few clients.

Sell in a Seller’s Market

Homes sell like hotcakes in a seller’s market, and that means sellers and their agents generally have to put in less work to make a home sell. If a realtor is putting in less work than they normally would, it’s only fair that they’d offer a lower price for reduced work.

Sell an Expensive Home

If your home is valued far above the median in your area, you may be able to negotiate a better commission deal. The more a home sells for, the more commission an agent gets, so it’s worth an agent’s while to agree to a lower commission if they think a home will sell for top dollar.

Think of it this way: if an agent charges 3% on a $100,000, they’ll net $3,000 from the sale. However, if a seller charges just 1% on a $1 million dollar home, they’ll make $10,000. Considering many agents work on homes at many different price points, it’s a better idea for an agent to lower their fee and sign on to sell a $1 million dollar home than it is to pass up the opportunity and sell a cheaper home at their normal rate.

Sell Multiple Homes

This case won’t apply to most sellers. However, if you’re investing in real estate and plan to sell several homes in a short time period with the same realtor, you can ask them for what equates to a bulk discount. The seller’s agent may get a lower commission, but they’ll come out ahead overall.

Work with an Inexperienced Agent

Generally, it’s best to work with an experienced agent. That said, if you’ve found a realtor you really click with who just got their real estate license and wants to build their clientele, you can often negotiate a lower commission rate with them. Since they likely won’t have much of a track record, being able to use you as a reference is likely more valuable to them than a higher commission.

Buy and Sell with the Same Agent

If you’re selling your home and looking to buy another, using your listing agent to buy your new home can be good grounds for negotiating a lower price. This will guarantee them two commission fees, so they’ll be more open to accepting a lower rate for each of them.

Work with a Full-Service, Low-Commission Agent

Real estate companies like Clever pre-negotiate a lower commission rate with agents they partner with. Sellers can enjoy a low commission fee without having to do any of the heavy lifting themselves. Clever Partner Agents will list homes under $350,000 for a flat fee of $3,000.

> Reach out now to start interviewing top, local agents.

FAQ About Negotiating Realtor Fees

How are realtor fees calculated?

Realtor fees are calculated based on the final closing price of a home. For example, if a listing agent’s commission fee is 3% and they sell your home for $200,000, you pay your agent $6,000 in commission fees.

However, since sellers generally pay both the buyer and seller agent’s fees, you would need to double this to 6%, which comes to $12,000 in fees.

Do buyers pay realtor fees?

Buyers generally do not pay realtor fees. Having to pay commission fees makes a buyer less likely to make a purchase, so it’s not a good idea for sellers to ask the buyer to pay in most cases.

That said, in very competitive seller’s markets, sellers may be able to negotiate with buyers to have them chip in for realtor fees. However, remember that this is not the norm.

How much are closing costs for sellers?

Sellers should be prepared to pay 6-10% in closing costs upon completing a sale. These costs include real estate agent commission fees, transfer taxes, attorney fees, title insurance fees, and loan payment fees. However, as long as you have enough equity in your home, these fees will be taken from the profit you make on your home, not out of your pocket.

Who pays for closing costs?

Buyers and sellers both pay different closing costs. Buyers can expect to pay 2-5% for loan origination fees, attorney fees, title search fees, escrow fees, underwriting fees, and other miscellaneous expenses.

Closing costs for sellers typically amount to 6-10% of the closing price. Generally, 6% will go towards realtor commission fees. However, sellers also need to pay transfer taxes, attorney fees, title insurance fees, and loan payment fees. These will vary from seller to seller.

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